Why Is Waste Connections (WCN) Down 0.9% Since Last Earnings Report?

Core Viewpoint - Waste Connections reported strong second-quarter 2025 results, with earnings and revenues exceeding expectations, but the stock has underperformed the S&P 500 recently [1][2]. Financial Performance - Adjusted earnings per share were $1.29, surpassing the Zacks Consensus Estimate by 3.2% and increasing 4% year over year [2]. - Revenues reached $2.4 billion, slightly beating consensus estimates and growing 7.1% from the previous year [2]. Segment Performance - The Solid Waste Collection segment generated revenues of $1.6 billion, missing the estimate of $1.7 billion [3]. - The Solid Waste Disposal and Transfer segment saw revenues surge 71.1% year over year to $756 million, also missing projections [3]. - The E&P Waste Treatment, Recovery and Disposal segment's revenues increased 4.9% to $123.6 million, falling short of the estimate [4]. - The Solid Waste Recycling segment's revenues grew 3.5% to $63.3 million, missing the forecast [4]. - The Intermodal and Other segment's revenues gained marginally to $49.1 million, missing estimates as well [4]. Operating Results - Adjusted EBITDA was $731.8 million, down 6.9% from the previous year, with an adjusted EBITDA margin of 32.6% [5]. - Operating income totaled $424.7 million, compared to $459.5 million in the prior year [5]. Balance Sheet & Cash Flow - Cash and cash equivalents at the end of Q2 2025 were $62.4 million, down from $111.2 million in the previous quarter [6]. - Long-term debt decreased to $8.1 billion from $8.4 billion [6]. - Cash generated from operating activities was $611.4 million, with adjusted free cash flow at $402.6 million [7]. Future Outlook - For FY25, Waste Connections expects revenues of $9.45 billion, lower than the Zacks Consensus Estimate of $9.51 billion [8]. - Adjusted EBITDA is anticipated to be $3.12 billion, representing nearly 33% of total revenues [8]. Market Sentiment - Since the earnings release, there has been a downward trend in estimates revisions for Waste Connections [9]. - The company currently holds a Zacks Rank 4 (Sell), indicating expectations of below-average returns in the coming months [12]. Industry Comparison - Waste Connections operates within the Zacks Waste Removal Services industry, where competitor Pentair plc has shown a 1.6% gain over the past month [13]. - Pentair reported revenues of $1.12 billion, reflecting a year-over-year increase of 2.2% [13].